DB-Commerzbank Deal

Given their newly articulated focus on globally scaling back to become a European focused, corporate and private less Anglo-Saxon cultured bank, I think the potential merger has a strong rationale. Fact is, the European banking sector is strongly fragmented both in corporate and private banking - there’s little willingness to pay for value added services by private customers, corporate credit is mostly given by classic lending rather than bonds. There’s many private mid market players and among them there’s less focus on accessing public and global capital markets than in the US/UK. By merging with Commerzbank, Deutsche would become the leading private client and SME focused player in Continental Europe in addition to serving its large cap client base. I personally do not think Deutsches global retreat the right strategy as I believe there’s a complete lack (and sufficient market share) for a top tier European IB player, BUT if Deutsche wants to become even more of a European champion than it currently (still) is, it needs to grow in the SME space because that’s where the growth in Europe is. COmmerzbank leads in the German SME market, it’s more favored by private clients than deutsche as well, so seems to be right tapping these markets via creating the number 1 European player that can serve both large caps, SMes, private clients be it UNHW or the average Joe in the German countryside.